The Newsroom Dilemma
73 Pages Posted: 12 Sep 2019 Last revised: 23 Aug 2023
Date Written: September 21, 2018
Conventional wisdom suggests that competition in the modern digital environment pushes media outlets toward the early release of less accurate information. We show that this is not necessarily the case. We argue that two opposing forces determine the resolution of the speed-accuracy tradeoff: preemption and reputation. While competition exacerbates preemption concerns, it gives the audience additional information by allowing them to compare publication times, permitting better outlets to separate themselves. Hence, more competitive environments may be more conducive to reputation building, which may lead to better reporting. However, the audience may be worse off in this environment due to the outlets' better initial information. Finally, we show that a strategic source may not necessarily share its rumors with both firms to quickly get "unverified facts" out to the audience.
Keywords: media competition, preemption, reputation
JEL Classification: D43, D83, L82
Suggested Citation: Suggested Citation